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Taking Stock With Pimm Fox

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U.s. 15, Washington 4, Us 4, Robert Levinson 4, Erin Hamlin 3, Hagel 3, Goldman Sachs 3, Larry Korb 3, David Konrad 2, Europe 2, Morgan Stanley 2, Chris Dessi 2, Chuck Hagel 2, Goldman 1, Nike 1, Sachs 1, Giants 1, Keri Geiger 1, Macquarrie 1, Peter Cook 1,
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  Bloomberg    Taking Stock With Pimm Fox  

    February 25, 2014
    9:00 - 10:01pm EST  

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>> this is "taking stock" for tuesday, february 25, 2014. i will focus on followers. chuck hagel wants congress to follow him like a good soldier. politicians are sure to push back against cuts. we debate the future of the u.s. armed forces and how much it all costs. and buying 50,000 twitter followers. we will tell you what that means and if it was worth it or not.
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victor cruz, how he has received quite a following which includes the music mogul jay-z. all that and more over the next hour. but first headlines from carol massar. >> after the close of u.s. trading, lower fourth-quarter profit. the company's declined from the power plants it is building in the southwest. falling to $65 million from 150 $4 million earlier. the stocks are falling in after-hours trading. dreamworks posted fourth-quarter revenue that missed analyst estimates. video sales fell short and fourth-quarter results including a charge of 13 point $5 million related to the performance of turbo which was released in theaters. morgan stanley has agreed to pay the u.s. sec $275 million to probe into the sale of mortgage backed securities in 2007.
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>> at this hour, the u.s. senate panel is releasing details of the two-year investigation into credit suisse's efforts to dodge the tax man. a hearing will feature top officials from the justice department. peter cook has got the details. credit suisse is about to have a very highlighted moment in the congressional spotlight. i cannot believe this is welcome to them. >> an unwelcome moment, to be sure. as you just detailed, four top executives at credit suisse will find themselves on the hot seat. about what they knew about the efforts to avoid paying taxes and what they have been doing at the bank to clean it up ever since. the report assembled by the staff of the senate's permanent subcommittee includes they
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employed a range of banking practices that facilitated tax evasion by u.s. customers. they had 22,000 customers with swiss accounts with $10 billion to $12 billion. the vast majority was undeclared to the irs. the investigation details the lengths to which the bank tried to shield its american customers. swiss bankers flew to the u.s. sometimes on tourist visas to recruit new clients. the bank helped create shell accounts to hide identities and even opened a branch office in the zürich airport to cater to its u.s. customers. >> individuals who use bank secrecy to hide income and evade taxes are cheating not just the government but also the honest americans who pay with
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-- what they owe. budget realities and simple justice require that tax cheats must come clean and pony up or face the consequences. >> chairman levin has been leading this multiyear effort in looking to tax saving banks. the expected to detail what the bank has been doing to close down u.s. accounts and just in time for this hearing. credit swiss agreed on friday to pay $179 million and admitted servicing without approval. panelists say that is not enough and they will challenge justice department officials to get even tougher with credit suisse and other swiss banks. >> there is more news on the banking front in washington. a top republican wants to raise their taxes. >> that is right. very big news on the banking front. the house ways and means chairman from michigan has been working for months on a plan to overhaul the u.s. tax system. there is one detail we have been
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able to confirm through a house republican aide. he will call for a new tax on the biggest banks in the country. a 3.5% basis point tax on total consolidated assets over $500 billion that would be applied quarterly and raise 86 point $4 billion over 10 years and target the 10 systemically important financial institutions. goldman sachs, morgan stanley, bank of america to my jp morgan chase, citigroup, and wells fargo and ge capital, aig, prudential, and met life insurers. here is the example of the hit they would face. assets as of december 31, 2013, 2 point $4 trillion. an estimated tax of 2.7 alien -- billion dollars or 15% of net
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income. you can understand why the big banks will fight this effort. a very big deal that dave kamp will fight. >> thanks very much. our chief washington correspondent. jpmorgan told investors today that it is cutting more jobs. they are trying to boost profits. for more insight on what this means i am joined by david konrad, the managing director and head of u.s. bank research at macquarie group and joining me here, keri geiger who covers the banking industry. tell us the news, what did jpmorgan say? >> jpmorgan seems to be very optimistic that over the next four to years they can increase profits. about 50%, which would be about $27 billion. within the industry that would be pretty significant. keep in mind that they will have
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to cut about 8000 jobs this year in the mortgage consumer bank on a wave of interest on mortgage refinancing. >> did they just do that to wells fargo? >> the business overall is declining. the number of refinancing with the uncertainty and the interest rates is probably carrying that business down. it is a competitive business. i am sure there is a lot of pressure. >> comment on this topic. will that the enough to get them back at the profit levels they described? >> i think it is as much of an issue. we have seen refinancing in the mortgage sector come down significantly. that continues through the first quarter. it is the recalibration and making sure that the business makes money. jpmorgan does not expect to make
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money and mortgage reduction. we are looking at 2015 for the company to turn around the mortgage production business. >> is this an unintended consequence and more direct government oversight when it comes to the banking industry? they talk about shrinking the large banks, is this the way they want them to do it? >> i think right now you look at jpmorgan, there is pretty meaningful growth underneath the balance sheet in terms of high quality credit. they issue a jpmorgan is they are often unwinding a lot of riskier loans that they made or want to and bear stearns made before the crisis, they probably will not meet current standards. what that means is having a flat net interest income and you grow better quality loans but also liquidate lesser quality loans.
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>> they were talking about these better quality loans but what about some of the other businesses that the bank used to be in and is in the process of either getting rid of or trying to find a home for, is the bank going to be looking different in five years? >> it depends on how we see regulatory issues play out. >> like commodity trading units, they're not -- they are the flavor of the month in the banking industry. >> it is looking at where banks think they can make money and the regulators who think the bank should be in business and that is one of the issues with the commodities. >> will they be regarded more like utilities and as such, their return on shareholder equity and across the capital will reflect the utility rather than perhaps previous growth model that many people look to? >> i think it is early to tell at this point. the banks' involvement is being closely looked at. it is something that has been in the news quite a bit the last year. it could change the banks' business model. >> i am not there yet on the utility model.
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that is a pretty strong return. i think the key to the utility thesis is what they do with the excess capital. it is a fair point that they are getting out of private equity. going more toward an agency flow trading business. all that a dampen revenues a bit but also frees up a lot of capital. right now jpmorgan is in a capital builder mode. they think they will get to a 10.5 by the end of this year. after that it depends on how much the fed allows buybacks and dividends going forward. can they manage their bank at 10.5% capital. i argue it would not be utility but if capital is trapped that
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thesis holds more water. >> david konrad is the head of research at macquarrie. coming up, a roundtable debate on cutting the u.s. military. details ahead. ♪
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>> u.s. defense secretary chuck hagel is digging in for what likely will be a battle with congress over proposed defense cuts. it would shrink the size of the army and eliminate some older weapons programs. the secretary laid out his plans yesterday. >> this is a time for reality. this recognizes the magnitude of the reality of our fiscal challenges, the dangerous world we live in, and the american military's unique and indispensable role in the security of this country and in today's volatile world.
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>> for more insight i want to bring in robert levinson. he is a retired colonel from the u.s. air force and has more than two decades of service and joining us, larry korb. they are both joining us from washington, d.c. if you could explain based on your experience and your reading of the proposed defense budget put forth yesterday, what is your initial reaction? >> basically, it is higher than we would have expected a year ago because you had the budget deal that gave some relief from sequestration. even if you control for inflation is higher in real terms than it was during the cold war and it brings us back to 2007 levels. all of the gloom and doom and people talking about, if all things considered, it is much better than we have had at the end of every other war that we have withdrawn from whether korea, vietnam, or the end of
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the cold war. >> robert levinson, based on what you just heard from larry korb, do you think congress and those people who have to approve the budget are going to listen to him? do they think it is a reasonable document? >> the congress approved the overall spending limits as part of the brand-murray deal. none of them have said do not cut this or that. they are sticking to the same number. it puts the military in a difficult position. >> what would you recommend based on your time in the white house and understanding how washington politics work, what should be the next step on the part of the administration with a democratic leadership?
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>> what they have to do is take a look at the budget and make the changes that secretary hagel has recommended rather than not going along with them. the big thing is going to be the proposals that secretary hagel made for slowing down the growth of military compensation because it is taking an increasing share of the budget and if you do not do that, there's not going to be enough money left for buying weapons or training the forces that you have. >> expand on that, the compensation not only for active duty personnel but for what happens when they separate from the service. >> in secretary hagel's budget, he is talking about slowing down the pay raises. in other words they get one percent rather than two percent or whatever the cost of living might be. he is also trying to get retirees to pay more for their health care when they set up the so-called tri-care system. retirees were supposed to pay
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25% of the costs and it has dropped down to eight percent. you have to raise the fees. one thing they did not do and they backed off on it is part of the ryan-murray budget deal they would slow down the growth of working age. the administration backed off and congress backed off on it under pressure from the veterans' lobby and i think we missed a big chance to begin dealing with the problem that has been growing for the last couple of years. >> robert levinson, does this budget proposal, and does it deal with the reality of the defense strategy of the u.s., does it shift our focus from europe to asia and is it accommodate the increasing battlefield of technology? >> it does do some of that. one of the areas where it does not really yet accommodate
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reality is they comply with the budget deal for 2015 but in the out years, 2016 and beyond, they're asking for more money than the congress and the president agreed to. in some sense, they are still not dealing with the reality of the fiscal situation that they are going to be an and they're not yet planning a force to live within those budget limits. >> do you think that is true for -- from the military's perspective? >> i think robert is right because i would like my 401(k) to get more, 10 or 12% return. i have to live with what they have. similarly, you might not like the numbers that are agreed to from the budget control act of 2011 but you ought to plan for it. what they did is in the 15 budget, the one they just put up, fiscal year 2015, they are assuming that they make it twice if billion dollars more from a wish list and then starting in
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16 through 19, they're assuming that sequestration and the budget control act is going to go away. as robert said, you're going to have to live within the congress has decided and it is much energy do it ahead of time then wait as they did last year when it hit in the middle of the year. they had to do a lot of dumb things like throw away people and cutting flying hours. >> i want to thank you gentlemen very much, larry korb and robert levinson. tomorrow i will be in washington as the defense summit. i will be interviewing former u.s. defense secretary william cohen. that is tomorrow at 5 p.m. eastern. the account #gselevator is revealed as a fake. he once bought 57,000 followers. this is "taking stock." ♪
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>> the "new york times" has uncovered the identity of a twitter account that is said to be the internal identity of a goldman sachs employee. posting tweets on what was believed to have been overheard in the elevator banks at goldman sachs or the firm. the person behind this specific messaging account is a former bond executive who lives in texas. he has never worked at goldman sachs. the authenticity of twitter accounts and messages they spew out and the followers they have is a topic that is familiar to my next guest. chris dessi is the ceo of silverback social.
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he actually purchased 50,000 followers. let's tell people what it is you did and why would anybody want to buy followers? for people who do not know about twitter, what is the deal? >> it was a mistake. buying twitter followers was a mistake. you can buy the numbers, you do not buy the engagement. you do not buy the equity that comes along with that. there was a moment in time where i was launching silverback social. i was working with a client that had a book out and she wanted to investigate purchasing new followers and i was tempted. i was backed against a wall and i said there is something to this. maybe the persona of more followers will help me get more speaking engagements and get more clients and i caved and i did it.
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>> what does it cost customer? >> a lot less than you think. how much do you think it would cost? >> a couple hundred dollars. >> $350. they go away just as quickly. they are fake. >> you did not buy 50,000 genuine followers. >> of course not. everyone should understand that. when you say you are buying followers it is just about that number that shows up next to your face on twitter. it is all fluff. there is no real engagement. if you take a closer look you can decipher who has purchased followers and who has not. you will see foreign accounts for us-based individuals and a lot of those accounts with the eggheads on twitter. there is no engagement whatsoever. no replies, just the blown up bombastic followers. >> i have to learn more about
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all this. chris dessi. and victor cruz, he has 300,000 real twitter followers. we will speak to him next. ♪
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>> this is "taking stock" on bloomberg. i am pimm fox. >> macy's posted fourth-quarter profits that topped estimates. they saw sluggish sales due to the cold weather. they said they will reduce costs through job cuts which will save $100 million year. in a memo sent to employees, it has returned all most all investor money. it has shrunk its headcount to
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850 people from 1000 as they focus on managing the private wealth of their founder. and he may consider selling the blackberry messenger service. >> running a public company, anything to help our shareholders, i need to take a very serious look at. that is a very serious point. today, we need to build up that base and build up the engagement model. >> more on bloomberg.com. the book is called "stress test," describing his decisions during the financial crisis. the memoir is scheduled for release soon.
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>> from an undrafted free agent to a super bowl champion, victor cruz is the version of the american dream. he has not slowed down even after winning a championship ring in 2011. he set records on the field and stays busy pitching some top brands off the field including campbell soup, time warner cable, and nike. victor cruz joins me now. thanks for coming in. much appreciated. i asked people to submit questions for what they would want to know about you and here's the first one. can you describe the giants' just-ended season in just one word? >> difficult. we had injuries that depleted the team early on and it is a struggle to build continuity. they have not been integrated into the program. we did our best and we started the season off rather difficult but it was too little too late at the end.
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>> let's look ahead to next season. any thoughts about where we can see you play, are you going to the super bowl? >> that is always the plan. i am planning to always play in the super bowl but we have 16 games before then and the playoffs after that. we are excited about what is to come and we have some things to take europe as far as players and things like that are concerned but we definitely are excited about next season for sure. >> is it exciting to be playing for the coach and with eli? >> i love the coach and he shoots up to you straight and pulls no punches. he vouches for his guys and stands up for people he believes in. >> the eagles, you have got a rivalry amongst other teams with
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the philadelphia eagles. one of the other running backs had a comment about playing in the super bowl. i will get your reaction. >> the time is coming in the next five years, we should get a couple of rings. the players and the attitude, we all have that same dream and the same goals. >> that was sean mccoy. any thoughts? >> they know for them to win championships they have to go through us. we are going to be prepared and ready to play. they have developed into a good team so we are excited about the opportunity. it should be a good game once we play each other. >> when we first met what was the first thing i said? >> you were surprised it was not bigger than you thought. >> you said everyone says this to you. >> what i did notice is that
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your hands are special. you are wide receiver. your job is to catch the ball. is this always the position you wanted to play? >> it was. i played running back early on in my football career in little league to get me acclimated. once i found out what a receiver was, i was wanted to be a wide receiver and my hands contributed to that. >> those are like magic hands. >> i would like to think so. >> when you just described this idea of running patterns and following plays, what is the focus that you have to dedicate at the beginning of every play because it is not just you're going to play the whole game, you start and you come back to the line. >> it is very focused. coming up to the line, want to get to play you have to know what you are running and look at the defense and see what they're giving you.
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this is within eight or nine seconds that you have to dissect what you're going to do before you do it against the opposing defense. it is always a struggle sometimes but sometimes you can get it and pick it up rather quickly and you can run your route and have a step ahead of your opponent without them even knowing. >> it is all most like improvisation. you have to be good at improv. i want to drag you over to the world of entertainment with that. jay-z, what are you doing with him? >> i am signed to his agency as an athlete for on the field work and things that i may need. it has been great to have a guy like jay-z be able to pick up your phone calls and you can pick his brain and talk to him about whatever is under the sun at this point. it is always good and good to have a person like that on your side. >> is that a different kind of relationship than you're used to with agencies and representation ? >> not really. i have had a good rapport with my agent. i could always pick up the phone and call him whenever i want.
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it so happens at this time it happens to be someone who sold a couple million records. >> imagine that. not so bad. >> exactly. >> a lot of talk about what is being said between players and their attitude. i wonder if you can give us your reaction to whether the certain foul language that is used on the field, should be banned, what is the general feeling among the players, you know these guys. >> as far as on the field is concerned, that is kind of our fraternity. we do not get to see the guys all the time. we have a ton of respect for each other but being out there, that is our fraternity. internally between ourselves and other players we should be able to say what we want to say as long as we're saying anything derogatory to another player or the referees. i do understand that the nfl is trying to clean up the league and make it something that when you hear it on tv, everything is clean and they are trying to clean up the game so i respect that. i think you cannot take away everything that has been built
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as far as our fraternity is concerned out there on the field. >> that also raises the issue of this social media network where everything seems to be getting out, everything is transparent. you have a lack of privacy within as you describe it, your fraternity. >> with social media, nothing is safe or hidden or discrete. it is out there. >> people are talking about your salary. you signed for 43 million. >> $48 million. >> you think that that is an invasion of your privacy? >> that is something you cannot escape from.
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when you play for a team in new york city, that stuff will be open book. people will know that information and you have to understand that it comes with the territory and you have to roll with the punches. >> you're not putting that genie back in the bottle. michael sanford, for example. the first openly gay athlete in the nfl. what has the reaction been amongst your fraternity? >> i think it has been fairly positive. i think -- i knew it was a matter of time before someone came out and for him to come out prior to entering the nfl benefits him because he does not have to feel awkward or feel weird when he is in the locker room and so out in the open. he has been on the football team long enough to know how to conduct himself and had to be a teammate. it should not be a hard transition for him. it is all good in my book. >> we will continue the conversation. i want to find out how you stay fit in the off-season. we have more with victor cruz and talking about promoting a healthy lifestyle for nfl players through gameplanforme.com. ♪
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>> this is "taking stock" on
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bloomberg. victor cruz is here and also joining us, george pyne. this is an interactive website and it is called gameplanforme.com. explain what it is and how did it come about. >> great to be here. it is a website that talks about the importance of having a plan for your health so you can go and listen to how someone overcame cancer. and played in the wnba. we want to encourage people to be thoughtful when it comes to their health. >> this is not for professional sports athletes exclusively.
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this is for everybody. >> people like victor and mark emma they are people who, health is important to their life so they are excellent role models in terms of talking about the importance of having a game plan for your health and well-being. >> victor, did you always have a game plan for staying healthy, diet, exercise and so on? >> i did. i always had a regimen of what i did eat. it is important to maintain that. it is important for your health and important for you to stay healthy and be at your peak informants while you're out there on the field or on the court, wherever you are playing. >> comment on what you want to accomplish with this. in having sports stars talk about their individual stories, is it to inspire people?
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>> they can ask if they are aware of the options out there to make myself as healthy as possible. we have them talk about the importance of having a plan for their health and well-being. >> have you ever may be gone out to dinner with other members of the team or other sports stars and you just cannot believe the kind of food they are eating or you cannot believe the way they take care or do not take care of themselves? >> there is a few. i will not name names. is that part of your diet or is that something you do one time or is that something that is part of your everyday schedule or part of your eating habits, and it is tough? i would like to indulge in some of those things but i like to keep my body intact and keep myself intact and i created this game plan for myself as far as nutrition is concerned. >> what is a typical victor cruz menu? >> i try to stay away from all fried foods and a lot of starches and i try to keep everything protein.
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i drink a shake and i am not a big breakfast guy in the morning before my workouts i will drink a shake and go out the door. something that is healthy and good for me. >> what about you? >> i try to work on it every single day. i travel 150 or 200,000 miles a year. i am in the air a lot and going out to dinner a lot. being thoughtful about what you eat is an important part of your life. also exercising is a good suggestion. >> it makes me think, i am curious. any change in what you're going to be doing on a routine basis, are you still going to be flying around the world? img acquisitions, combinations. >> we are in the hundred. >> acquisition by william morris. >> it has been in business for
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50 years and it is a terrific company. the best is yet to come. >> you want to have a vacation? >> i have to work. nothing is for free. >> they need a game plan as well. just last points here. is there anything that you would suggest that george change in terms of his diet or lifestyle to become healthier? >> it is kind of tough with his life still being in the air. >> what about a treadmill on the plane? wouldn't you have to hydrate? >> that is the biggest key and you are flying. as long as he is staying hydrated and getting some good meals on the plane or bringing some good meals, i do not know how healthy those meals are. >> stay away from the fried -- no fried food. and ice cream. >> thanks very much. tell me the website. they go on and sign up. >> there are some great stories from some great athletes, gameplanforme.com.
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>> our guest zoomed into the record books. you will meet the luger, erin hamlin. she got a bronze medal at sochi. that is next. ♪
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>> the 2014 winter olympic games have come to a close. my next guest has returned to the u.s. with a bronze medal and a piece of history. erin hamlin took her first sled run at the age of two. fast forward 25 years, she has become the first american ever, male or female, to win an
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olympic gold medal in singles luge. very happy to have you here. what is luge? >> it is the french word for sled. we go feetfirst down the track and we are trying to beat the clock and get from top to bottom as fast as we can. >> there are brakes or no brakes? >> yes. >> we are trying to go as fast as we can. there is a steering system and not quite a suspension but it is a flexible device. we have steering with our legs and hands with handles and any shifting of our body weight. we are on a slightly sharp edge and we use that to dig into the ice, kind of like skiing. >> you do this while you are traveling 90 miles an hour.
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>> potentially. every track is different. >> do you know how fast you are going? >> not as we are going down. we can see the time after. sometimes if you mess up and maybe start hitting a few walls you can tell sometimes that you're going really fast because it does not always feel the best but for the most part you cannot tell i am going 85 right now. >> i mentioned you got a bronze medal. you are the first american to ever win a medal in this event. how does it make you feel? >> pretty good. i wanted to succeed. this is a bonus i guess. it is a pretty nice piece of hardware. >> it weighs a little bit. >> it is pretty heavy. it is substantial in the way that your run was substantial. let's go back to how you got interested in luge.
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>> i never grew up saying that i wanted to be a luge athlete. my dad had seen an ad for the slider search which is how you get kids recruited. >> do other countries have a kind of pipeline? >> absolutely. germany is the dominant country in the sport and we have four tracks that we compete on. they can pick and choose a little bit more. >> your father found this organization or this program for you? >> he saw the ad for it and said this looks different and might be something the kids would want to try. it turned out to be a decision. 14 years later, i am still here.
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>> what is a training day like for you when you're getting ready for an event? >> we are getting ready so we go into training with a race week. we have three days, six runs broken up over three days and we race for two weeks and pack everything up and travel to the next lace. we try to get into the gym two or three times a week. we spend anywhere from two to three hours at the track with our sliding. and a couple of hours at the gym. >> we have some fantastic team sponsors. they have been amazing and stuck with us even through tough times. >> would you like more sponsors for the u.s. singles luge? >> we are on our own for private funding. it is a double-edged sword. we
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need funding to do well but you always need good results to get the attention of funders. >> you got a good result with your bronze medal. you will be in demand. it is next for you, what do you want to do next? >> i am excited to get home and relax a little. potentially take a nice vacation. a beach somewhere would be nice. i am excited to -- i will still compete but i am excited to move into maybe a couple of other avenues of the sport. i am working with the city every step of the way program. to come full circle with my career and help the next generation of athletes would be great. i take classes at devry university. they start in a week. >> i want to thank you very much and congratulations, bronze medalist erin hamlin. time for on the markets. stocks fall today. thanks for "taking stock."
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